The Financial Conduct Authority

The Government believes the current system of financial regulation is flawed and is passing new legislation to strengthen and reform its structure.

At present the existing regulator – the Financial Services Authority (FSA) – divides its responsibility between monitoring the health of financial institutions and overseeing the way firms conduct their business. The Government intends to separate these competing responsibilities to provide a clearer, stronger mandate for the regulation of financial services.

Under the Government’s plans to reform the UK regulatory framework, responsibility for firms’ conduct-of-business will be passed to a new consumer protection and markets authority (CPMA). Meanwhile the new Prudential Regulation Authority (PRA), as a subsidiary of the Bank of England, will be solely responsible for the authorisation, regulation and day-to-day supervision of all firms that are subject to prudential regulation. In addition, the new Financial Policy Committee (FPC) in the Bank of England will be given responsibility and tools for maintaining financial stability. This will help ensure that consumers and the wider economy are better protected in the future.

The consumer protection and markets authority will regulate:

the conduct of all firms in their dealings with retail customers, taking a proactive approach as a strong consumer champion;
dealings in wholesale financial markets – the conduct of all wholesale financial services firms; firms providing market services (such as investment exchanges); and
overall market conduct

In line with the Chancellor’s Mansion House speech, in July 2010, the Financial Secretary to the Treasury, Mark Hoban MP, launched the Government’s consultation on the proposed reforms. This consultation closed in October 2010.

A new approach to financial regulation: judgement, focus and stability: Consultation document, responses and a summary of responses

Building on this, the Government presented a further consultation on its proposals in February 2011. This consultation is live and will close on 14 April 2011

A new approach to financial regulation: building a stronger system

The Financial Conduct Authority

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